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Upside Gap Tasuki Candlestick Pattern

large bullish candlestick followed by gap up then a small bullish body, then a small bearish candlestick that closes within the gap, then a bullish candlestick upward

The upside-gap tasuki is a three candlestick bullish continuation pattern that occurs during an uptrend. The first day is a bullish candlestick. The second day is a smaller bullish candlestick that gaps up from the previous day. The third day is a bearish candlestick that opens within the real body of the second day and closes below the real body of the second day and fills in some of the gap. It is preferable that the bullish candlestick of day two and the bearish candlestick of day three be about the same size. According to Nison (1991, p. 129), the close of the third day’s bearish candlestick is a buy signal. Remember that gaps or windows act as support for corrections; therefore, buying the third day’s close which is in the price range of the window, is just betting on the window acting as support and that the upward trend will continue.

Downside Gap Tasuki Candlestick Pattern

large bearish candlestick on first day, gap up then a small bearish  candle on 2nd day, small bullish candle on third day that closes into gap, then long bearish candle to continue

The downside-gap tasuki is a three candlestick bearish continuation pattern that occurs during a downtrend. The first day is a bearish candlestick. The second day is a smaller bearish candlestick that gaps down from the previous day. The third day is a bullish candlestick that opens within the real body of the second day and closes above the real body of the second day and fills in some of the gap. It is preferable that the bearish candlestick of day two and the bullish candlestick of day three be about the same size. Rhoads (2008, p. 241) suggests the close of the third day bullish candlestick as the place to initiate a short. Once again, the logic being that the window in a downtrend acts as an area of resistance. The third day bullish candlestick closes in that area of resistance and therefore a trader shorting there is expecting the resistance to hold and the trend to continue downward.

Upside Gap Tasuki Candlestick Chart Example

candlestick chart of upside gap tasuki

The chart above of the Nasdaq 100 ETF (QQQ) illustrates an upside gap tasuki candlestick continuation pattern. A bullish candlestick (day one) is followed by a gap up and another bullish candlestick (day two). The third day’s candlestick is a bearish candlestick that used the upper line of the window as support. Generally, a bullish trader would buy at the close of the third day’s bearish candlestick. On this specific chart, the trader would have made a very profitable trade to the upside.

Downside Gap Tasuki Example

chart of the downside gap tasuki candlestick pattern

The chart above of the Silver ETF (SLV) shows a downward gap tasuki bearish candlestick continuation pattern. A bearish candlestick (day one) is followed by another bearish candlestick (day two) that gapped lower. The third day is a bullish candlestick that rose into the price levels of the gap. The third day’s closing price would be when a trader would go short. The trend continued downward, but not without another retest of the window acting as resistance.

Works Referenced

  1. Kirkpatrick II, C.D., & Dahlquist, J.R. (2010). Technical Analysis: The Complete Resource for Financial Market Technicians (2nd ed.). Upper Saddle River, NJ: FT Press.
  2. Rockefeller, B. (2011). Technical Analysis For Dummies (2nd ed.). Hoboken: John Wiley & Sons.
  3. The Pattern Site. (2008). Bulkowski's Measure Rule. Retrieved June 1, 2012, from http://thepatternsite.com/measure.html